#$1.$ What is inventory and what financial statement recognizes inventory $($i$.$e$.,$ shows the amount of inventory$)$ held by a company?

#$2.$ Cheryl believes that companies report cost of goods sold and ending inventory based on the actual units sold and not sold.$$ Her accounting instructor explains that most companies account for cost of goods sold and ending inventory based on assumed units sold and not sold. Help her understand why companies are allowed to do this.